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Thursday 20 September 2018

Glanbia reports ‘positive’ first quarter despite currency headwinds

Photo Mark Stedman/Photocall Ireland
Photo Mark Stedman/Photocall Ireland
Siobhán Talbot, group managing director of Glanbia Plc. Picture: Aidan Crawley/Bloomberg
Ciaran Moran

Ciaran Moran

Glanbia delivered positive revenue growth of 4.8pc at constant currency in the first quarter of 2018 from wholly owned continuing operations.

However, Interim Management Statement for the three month period ended 31 March 2018 noted that on a reported basis, reflecting the weaker US Dollar Euro foreign exchange rate, revenue decreased 8.1pc when compared to the same period in 2017. 

The group highlighted in its outlook that if the average Euro US Dollar foreign exchange rate for the full year remains at similar levels to the average rate for the first quarter of 2018, Glanbia expects an approximate 8pc translational headwind to full year reported results.

Siobhán Talbot, Group Managing Director said “the year has started as planned and we reiterate our full year guidance of 5pc to 8pc growth in adjusted earnings per share, constant currency, from the continuing Group (pro-forma*) in 2018 with growth to be delivered in the second half of the year.”

The key driver of revenue increase on a constant currency basis was volume growth from both Glanbia Performance Nutrition and Glanbia Nutritionals which was 7.2pc. Acquisitions contributed 3.6pc growth in revenue. 

Pricing declined by 6.0pc year on year driven by relatively weaker dairy markets and brand investment in Glanbia Performance Nutrition.

Glanbia Performance Nutrition (GPN) saw revenue increased by 9.3pc and this was driven by volume growth of 5.5pc, the Body & Fit acquisition delivering 7.8pc, offset by a price decline of 4.0pc.

Glanbia said GPN delivered volume growth in both the US and other key international markets. In the US, it said this was broad based across key channels. In non US regions, emerging markets delivered strong growth as GPN continues to benefit from the prior investment in building its international capabilities.

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Glanbia Nutritionals delivered revenue growth in line with expectations in the first three months of 2018. Revenues increased by 1.1pc versus prior year. This was driven by a volume increase of 8.6pc offset by a price decline of 7.5pc.

Nutritional Solutions revenue decline

Nutritional Solutions revenue declined by 3.6pc in the period.  Glanbia says this was driven by volume growth of 2.6pc which was across dairy and non-dairy ingredients offset by a price decline of 6.2pc which was related to relatively lower year on year dairy prices. 

The Groups US Cheese revenue increased by 5pc in the period. It says this was driven by volume growth of 13.7pc due to the timing of customer off-takes versus the prior year. However, pricing declined by 8.7pc as a result of reduced cheese markets year on year. 

Price decline at Glanbia Ireland

Glanbia said revenues from Joint Ventures (“JVs”) increased by 29.7pc in the first three months of 2018.

The transaction to create Glanbia Ireland delivered 34.8pc revenue growth, volume growth was 4.3pc and this was offset by a price decline of 9.4pc as a result of comparatively lower year on year dairy markets. As a result, Glanbia says the outlook for JVs is for earnings to be reduced in 2018 versus prior year particularly in the first half of the year.

Meanwhile the project to expand production capacity by 25pc at the Southwest Cheese facility in the US is nearing completion with commissioning expected to be concluded in quarter two, 2018.

Glanbia reduces debt

Glanbia's net debt at 31 March 2018 was €385m, which represents a decrease of €350m versus the net debt position at the end of the first quarter of 2017.  This improvement has been primarily driven by the receipt of proceeds from disposals made in 2017.

Full year outlook

Glanbia reiterates its guidance that on a pro-forma basis adjusted earnings per share for the continuing Group is expected to grow between 5pc – 8pc constant currency for full year 2018.

Earnings growth is expected to be delivered in the second half of 2018. Comparative dairy market pricing and planned investments will deliver a reduced performance in the first half of the year.


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